Ethics and Contracts Flashcards

This set of vocabulary flashcards covers the fundamental elements of contracts, the doctrine of unconscionable bargains, vitiating factors like duress and undue influence, and the various forms and consequences of contract illegality.

Contract

An agreement or promise (written or oral) between two or more persons which is legally binding and enforceable at law.

Agreement

One of the four elements of a contract where one party makes a firm, unambiguous offer which the other party accepts.

Consideration

The bargaining that leads to an exchange; the value that induces parties to enter a contract and distinguishes it from a gift.

Gift

A voluntary and gratuitous transfer of property without something of value promised in return, making it unenforceable as a breach of contract due to lack of consideration.

Capacity

The legal ability of parties to enter a contract, meaning they are not minors, of unsound mind, or under the influence of drugs or alcohol.

Unconscionable Bargain

An unfair provision or transaction that no reasonable person would enter into, often so one-sided that it is unenforceable under law.

Undue Influence

Occurs when one party exercises pressure or coercion on another party to sign a contract, often involving the abuse of a dominant position in a relationship.

Presumed Undue Influence

A legal acknowledgment of the danger of abuse in specific unequal relationships such as solicitor/client, teacher/pupil, or trustee/beneficiary.

Duress

The application of illegitimate pressure, such as a physical or verbal threat, that leaves a party feeling they have no choice but to sign an agreement.

Economic Duress

A type of coercion caused by putting the aggrieved party under the fear of causing an economic loss.

Unequal Bargaining Power

Occurs when one party has an unreasonable advantage, such as additional resources, knowledge, or the use of complex technical jargon and small font to mislead the other party.

Unfair Surprise

Occurs when a party creates a clause or provision without the other party's knowledge that the other party would not have agreed to.

Limiting Warranty

An attempt by a party to limit their own personal liability in the event the contract is breached.

Illegal Contract

An agreement where the actual subject matter is against the law, such as illegal gambling or a contract to commit a crime.

Illegality Doctrine

A rule holding that litigants engaged in unlawful practices may not access the court system to enforce rights to proceeds of an illegal act.

Void Contract

A formal agreement that is effectively illegitimate and unenforceable from the moment it is created, such as those involving illegal activities or certain parties lacking capacity.

Voidable Contract

A contract that may be canceled or altered for qualified legal reasons, such as misrepresentation, fraud, or when one party is a minor.

Ratification

The process of correcting a voidable contract by having all parties agree to new terms that remove the initial point of contention.

Disaffirmance

The legal right to void a voidable contract.

Statutory Illegality

Contracts that are directly prohibited by legislation, have an illegal objective, or are illegally performed.

Common Law Illegality

Contracts contrary to public policy or morality because the courts find them injurious to society or against the public good.

Restraint of Trade

A category of contract that offends public policy by including terms that restrict a person's right to carry on a profession or business, as seen in the case of Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd.

Severance

A remedy where the court removes illegal terms from a contract to allow the remainder of the agreement to be enforced.

Void Ab Initio

A legal term meaning 'void from the beginning,' describing a transaction that is ineffective from the start.